Forex Forum, Best emotion control tips while you trading.
Our emotions have a significant impact on the decisions we make. Trading is all about making decisions of what to buy, what to sell and what to hold. Most traders have a hard time controlling their emotions. Many of them have even blown up their trading account because of lack of control on emotions.
In this article we will discuss about how to control emotions while trading. Also, we will mention the exact actions to take when you think you are unable to control your emotions.
What is emotional trading?
Emotional trading is when a trader or investor lets personal feelings and emotions impact their decision-making. Sometimes it can be helpful, but usually bringing emotion into trading is a bad idea.
Psychology
Trading Psychology is considered to impact and affect up to 95% of overall trading success. When we think about trading in terms of psychology, this is knowing when to enter a position and when to not enter a volatile market and leave the market alone.
A trader is their own worst enemy when it comes to Forex and it is their responsibility to come to terms with that. The trader is, after all, the chief decision-maker so it's up to the trader to introduce adequate measures to protect open positions. For learn more about forex trading psychology, you need to visit forex forum. Forex forum is one of the best places for learn proper about forex.
Here are some tips, how you can control your emotion in forex trading:
1. Greed
The general definition of greed – excessive desire for more of something than is needed.
In forex trading expecting a higher return is the worst mistake you can ever do in your trading career. Greed prompts you to take trades continuously without realizing that the market will be open again tomorrow. So as a result of this trading behavior traders often ended up fall into overleveraging and overtrading. So, you have to avoid greed in forex trading.
2. Dealing with a losing position
No matter how diversified and well-tested a strategy is, there will always be times when it's sitting in the red. When losses start to grow, the emotions will distort our perspective on reality.
Cortisol is released by the brain – this is a stress hormone that interferes with thought, memory and rational decision making. This process is very subtle and happens below the level of conscious awareness.
3. Using stop orders
Stop orders are very unique tools that have been designed to help both the busy trader as well as the emotional trader. But its biggest advantage is that it helps you take control of your greed when trading, or more specifically removes greed from the equation completely.
Essentially what these orders do is help you set a specific price point of a financial instrument and register it on the software as a place to either buy or sell something automatically. For Learn more about stop-loss click here...
4. Remember the past
When the stock market dives, remember that this isn't the first time it's happened.
"The stock market has overcome so many obstacles," said Goldberg, pointing to 9/11, the Great Recession and the market crash of 1987.
"What happened each time? The stock market recovered and claimed new highs."
So, Remember the past when you will start trading. It's can help you to control your emotion in forex trading.
5. WAIT FOR A CANDLE TO CLOSE
A trader must not catch a candle which is still open. An open candle provides misleading signals which will leave you in a mess. Do not let your emotions drive your decisions while trading. Many times, these misleading signals are the reason for losing trades.
6. STOP TRADING AFTER TWO CONSECUTIVE LOSSES OR WINS
A trader starts feeling like a loser after two consecutive losses. Since they don't want to lose, they start doing revenge trading. Similarly, a trader feels invincible after two consecutive wins. They think today they cannot lose at all and they start taking some fast and bad decisions without proper analysis. So, a trader should stop trading after two consecutive losses or wins to control their emotions.
7. Overconfidence
If you hit a rich vein of winning trades, as your strategy works favorably during the current market conditions, overconfidence can rear its head. This can have many negative side effects, but the main one to be aware of is over trading.
The importance of day trading emotional control cannot be overstated.
Imagine you've just taken a trade ahead of Non-Farm Payrolls (NFP) with the expectation that if the reported number is higher than forecasts, you will see the price of EUR/USD increase quickly, enabling you to make a hefty short-term profit.
NFP comes, and just as you had hoped, the number beats forecasts. But for some reason, price goes down!
You think back to all the analysis you had done, all the reasons that EUR/USD should be going up – and the more you think, the further price falls.
As you see the red stacking up on your losing position, emotions begin to take over – this is the 'Fight or Flight' instinct.This impulse can often prevent us from accomplishing our goals and, for traders, this issue can be very problematic, leading to knee-jerk reactions.
Professional traders don't want to take the chance that a rash decision will damage their account – they want to make sure that one knee-jerk reaction doesn't ruin their entire career. It can take a lot of practice, and many trades, to learn how to minimize emotional trading. Learn more about forex trading emotion control at dailyfx.com
Instead, use time to research the factors that influence markets rather than relying on intuitions and guesswork. Or analyze your trading plan and see how it can be improved.
Even so accept that you can do all of the analysis in the world, and do everything possible but sometimes the market just won't go in the direction you expect it to. Accept that there are always circumstances that cannot be foreseen.
You can learn more about forex trading strategies and currency trading tips at forex.forex
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It’s a mind game. So, it is best to trade when your focus is at 100%
